Mohd.Israil Sheikh, Nagpur V. Assistant Commissioner of Income Tax,Circle-8, Nagpur

ITA 260/NAG/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3144 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 05-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Business income; Principle of natural justice; Fair market value; Non compliance
• Section: 50C; 144

Judgement Text

1 ITA NO. 260/NAG/2012 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 260/NAG/2012 ASSESSMENT YEAR : 2007 - 08. MOHD. ISRAIL SHEIKH, ASSTT. COMMISSIONER OF INCOME - TAX, NAGPUR. VS. CIRCLE - 8, NAGPUR. PAN AFJPS 3192K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAILASH JOGANI. RESPONDENT : SHRI NARENDRA KANEA DATE OF HEARING : 14 - 01 - 2016 DATE OF PRONOUNCEMENT : 5 TH FEBRUARY, 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS) - I I, NAGPUR DATED 13 - 03 - 2012 . SUBSTANTIVE G ROUNDS RAISED ARE REPRODUCED BELOW : 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.14,70,000/ - AS SHORT TERM CAPITAL GAIN INSTEAD OF INCOME FROM BUSINESS. 2. WITHOUT PREJUDICE TO THE ABOVE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADOPTION OF STAMP VALUE AS THE SALE PRICE WITHOUT APPRECIATING THE FACTS OF CASE. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 144 OF THE I.T. ACT DATED 31 - 12 - 2009 WERE THAT THE ASSESSEE IS IN THE BUSINESS OF HIRING OF JCB. APART FROM THE ABOVE BUSINESS, IT WAS N OTED BY THE AO THAT THE ASSESSEE HAD EARNED CAPITAL GAIN ON SALE OF PROPERTY AS PER THE FOLLOWING DETAILS SUBMITTED BY THE ASSESSEE : 2 ITA NO. 260/NAG/2012 SR N O. PARTICULARS YEAR OF PURC - HAS E AMOUNT OF PURCHASE INDEX COST. YEAR OF SALE AMOUNT OF SALE. PROFIT/ LOSS. 1 HOUSE BUILDING CHANDRAPUR 81 - 82 35,000 1,81,650 06 - 07 5,00,000 3,18,350 2 FACTORY SHED/LAND & MACHINERY 91 - 92 628521 16,39,208 0 6 - 07 1251000 - 388208 3 AGRI LAND 5,00,000 EXEMPT TOTAL - 69,858 THE ASSESSEE HAD SHOWN THE SALE PRICE OF FACTORY BUILDING WITH APPURTENANT LAND AT RS.12,51,000/ - . AS AGAINST THAT, THE STAMP VALU E AS PER THE REGISTRAR WAS AT RS.27,21,000/ - . THE DIFFERENCE B ETWEEN THE TWO OF RS.14,70,000/ - WAS, THEREFORE, TAXED IN THE H ANDS OF THE ASSESSEE. 2. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE HAS CHALLENGED THE ORDER PASSED U/S 144 OF I.T. ACT BY RAISING A GROUND THAT INSUFFICIENT OPPORTUNITY OF HEARING WAS GRANTED BY THE AO AND THE ORDER WA S PASSED IN A HURRIED MANNER WHEN IT WAS ABOUT TO BE BARRED BY LIMITATION. ON MERITS THE MAIN ARGUMENT OF THE ASSESSEE WAS THAT AS PER THE PROVISIONS OF SECTION 50C IF THE AO WANTED TO ADOPT A DIFFERENT VALUATION THEN HE SHOULD HAVE REFERRED THE MATTER TO THE DVO. THE LEARNED CIT(APPEALS) HAS DISMISSED BOTH THE OBJECTIONS AND THE ADDITION MADE BY THE AO WAS CONFIRMED IN THE FOLLOWING MANNER: IN THE CASE AT HAND, APPELLANT HAS NOT PRESENTED HIMSELF BEFORE A.O., NO OBJECTION WAS FILED AND PLEADED BEFORE A. O., HENCE THE CONTE3NTION THAT A.O. SHOULD HAVE REFERRED THE MATTER TO VALUATION OFFICER DOES NOT HOLD GROUND. ANOTHER PLEA THAT SINCE APPELLANT IS A DEALER IN LAND AND SOLD THE LAND IN SHORT PERIOD, IT SHOULD BE TREATED AS BUSINESS INCOME OF THE APPELLANT . THIS PLEA IS COMPLETELY WITHOUT BASIS AND APPELLANT IS NOT DEALER IN LAND BUT A CONTRACTOR AND ALSO DERIVED INCOME FROM HIRING OF JCB AND THE PLEA IS TAKEN IS MISLEADING AND NO BUSINESS INCOME FROM LAND DEALS IN PAST, HAVE BEEN SHOWN BY THE APPELLANT AND NO SUCH MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT APPELLANT WAS OR IS A DEALER IN LAND NEITHER THEN NOR NOW. IN FACT, IN NEXT YEAR APPEAL 3 ITA NO. 260/NAG/2012 BEFORE ME WHEN APPELLANT WAS FOUND TO BE ACTUALLY DEALING IN LAND. BASED ON THE FACTS AND CIRCUMSTANCES OF THA T YEAR, APPELLANT HAS CLAIMED THERE THAT HE IS NOT DEALER IN LAND AND THE ENTIRE INCOME SHOULD BE TAKEN ONLY AS CAPITAL IN THAT YEAR. HENCE, IT IS CLEAR THAT APPELLANTS SUBMISSIONS ARE NOT ACCEPTABLE IN THIS YEAR AS APPELLANT HIMSELF HAS SHOWN THE GAINS F ROM SUCH LAND DEALS AS CAPITAL GAINS AND NOW TO AVOID RIGOURS OF SECTION 50 SPECIALLY ENACTED TO BRING TO TAX THESE TYPE OF CASES IS CLAIMING THAT HE IS DEALING IN LAND. IN VIEW OF THE ABOVE DISCUSSION, ADDITIONS MADE BY A.O. ARE CONFIRMED AND BOTH THE APP EALS ARE DISMISSED. 3. ON THIS SHORT ISSUE WE HAVE HEARD BOTH THE SIDES. AT THE OUTSET THE MAIN ARGUMENT OF LEARNED A.R. MR. KAILASH JOGANI WAS THAT ADEQUATE OPPORTUNITY OF HEARING WAS NOT GRANTED BY THE AO WHICH HAS RESULTED INTO CONFIRMATION OF ADDITION BY CIT(APPEALS). ON MERITS HE HAS PLEADED THAT IN VIEW OF THE RATIO LAID DOWN BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF SUNIL KUMAR AGRAWAL (GA NO. 3686, ITAT NO. 221 OF 2013) ORDER DATED 13 TH MARCH, 2014 AS WELL AS IN THE LIGHT OF THE ORDER OF ITAT KOLKATA BENCH C IN THE CASE OF ITO VS. ONKARMAL KARARIA FAMILY TRUST (ITA NO. 1065/KOL/2011, A.Y. 2006 - 07) ORDER DATED 27 - 10 - 2014, IT IS ONE OF THE CONDITION OF SECTION 50C TO REFER THE MATTER TO DVO IN TERMS OF THE PROVISIONS OF SECTION 55A OF I.T. ACT. 4. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE FACT THAT THE AO HAS NOT MENTIONED THE DATES ON WHICH THE HEARING WAS GRANTED TO THE ASSESSEE OR WHETHER THERE WAS ANY NON COMPLIANCE ON THE PAR T OF THE ASSESSEE OR THAT WHY AN EXPARTE ORDER WAS PASSED U/S 144 BY HIM, WE DEEM IT PROPER AS WELL AS THE NATURAL JUSTICE ALSO DEMANDS TO REFER THE ENTIRE ISSUE BACK TO THE FILE OF THE AO TO DECIDE DENOVO AS PER LAW. WE HEREBY DIRECT T HAT IF THE AO IS OF THE OPINION THAT THE VALUE OF THE CONSIDERATION WAS INAPPROPRIATE THEN HE CAN REFER THE MATTER TO THE DVO FOR ASCERTAINING THE FAIR MARKET VALUE AS ON THE DATE OF SALE TO COMPUTE THE CAPITAL GAIN CORRECTLY. SIDE BY SIDE WE ALSO HEREBY DIRECT THIS ASSESSEE TO FULLY COOPERATE WITH THE AO TO GET THE ASSESSMENT FINALIZED AT AN EARLY DATE. RATHER WE DEEM IT NECESSARY TO DIRECT THIS ASSESSEE TO PRESENT HIMSELF OR THROUGH 4 ITA NO. 260/NAG/2012 HIS AUTHORIZED REPRESENTATIVE WITHIN 30 DAYS ON RECEIPT OF THE ORDER OF THE TRIBUNAL BEFORE THE AO AND NOTE DOWN THE QUERIES RAISED AND COMPLY PROMPTLY. SINCE THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF THE AO FOR DENOVO CONSIDERATION, HENCE THE GROUNDS RAISED BEFORE US MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES ONLY. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF FEBRUARY, 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 5 TH FEBRUARY, 2016. COPY FORWARDED TO : 1. MOHD. ISRAIL SHEIKH, 604/2, N.I. MANSION, N.M.V. LAYOUT, BYRAMJI TOWN, NAGPUR - 440014. 2. A.C.I.T., CIRCLE - 8 , NAGPUR. 3. COMMISSIONER OF INCOME - TAX - ,NAGPUR. 4. CIT(APPEALS) - I I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.